YVR reaches beyond the sky with expanding retail operations

JEFF LEE, Vancouver Sun08.15.2012

RICHMOND, BC — AUGUST 13, 2012 — A new World Duty Free store opens at YVR in Richmond on August 13, 2012. It includes many interesting and expensive scotches.
(Wayne Leidenfrost/ PNG)
(For story by Jeff Lee)

It’s not every day that someone strolls through Vancouver International Airport’s duty free shop and picks up a $34,000 bottle of cognac, or a 70-year-old bottle of rare Scotch whiskey listed for $38,000.

Much more common are the sales of water, food, souvenirs, clothing, electronics and yes, alcohol priced sanely enough that one isn’t afraid to open the bottle.

But those rare high-end purchases, along with all of the other commerce at YVR’s growing airside shops, have helped turn it into one of the most commercially successful airports in North America.

The Vancouver International Airport Authority this week said a survey of international airports shows that passengers at YVR are the second-highest spending passengers in North America. On average they drop $20.11 per person before boarding their flight; only at New York’s John F. Kennedy Airport is the per capita spend higher, at $24.07.

In comparison, passengers leave behind $12.97 in Calgary and $17.39 in Montreal.

Susan Stiene, YVR’s Director of Commercial Services said the rare whiskey and cognac business is a direct example of how the airport has specifically tailored its shops and services to meet the particular demands of passengers, with dramatic payoffs for the airport and the local economy.

It comes amid an aggressive effort by the airport to expand its commercial base into everything from designer brands and outlet stores to a higher quality dining experience.

“Two years ago we were looking at the Chinese market because we knew we were growing at a huge rate from a Chinese perspective. That was how we got into the rare whiskies,” she said.

“We actually will take a look at the diversification of passengers and where the growth is in the various markets. When we see that there is a specific nationality that is going to be growing, we will go out and interview the existing [passengers] who are coming through and find out what we are missing here at the airport.”

In 2010, shortly after the whiskey and cognac section opened at one of YVR’s duty free shops, a Chinese couple paid $34,000 for a 1.5-litre bottle of Rémy Martin Louis XIII Black Pearl cognac. It was a price that caused a frenzy among cognac and whiskey connoisseurs unaware that YVR was now catering to collectors’ tastes.

Earlier this year, World Duty Free Group, the company that runs YVR’s concessions, paid more than $65,000 for one of only 15 existing bottles of Glenfiddich Janet Sheed Roberts Reserve, with the intention of putting it on display in one of its stores, possibly at YVR. Stiene said the company has also brought in rare bottles of Glenlivet.

It is all part of an effort to capture a lucrative share of the business generated by returning Chinese travellers.

In the past, YVR, like most airports, met passenger purchasing demand by providing basic stores that offered general goods and food. It had, like many airports, a reputation for overpricing on the theory that once through security, passengers had no choice of where to spend their dollars.

But Stiene said YVR has moved away from that concept and now insists stores offer “street prices” based on Robson Street price tags. That competitiveness, coupled with an increasing diversity of goods and services, is why YVR’s average passenger spend is so high, she said.

YVR has more than 170 shops in 166,000 square feet of retail space and contracts with U.K.-based World Duty Free Group to operate its duty-free concessions. Under Canadian law airports can only obtain one duty-free licence, so WDFG operates all of YVR’s 10 duty-free shops. At more than 56,000 square feet, those shops give the airport the largest duty-free space in North American airports outside of JFK in New York.

But YVR, which serves more than 17 million passengers and pays Ottawa $34 million a year in rent, is also looking beyond its airport operations. Earlier this year it announced plans to build a 460,000-square-foot designer brand retail outlet with about 200 stores. It gave the contract to London-based McArthurGlen Group, which expects to open the first phase of 97 stores along Russ Baker Way in 2014.

In addition to the outlet mall and the recently expanded domestic terminal, YVR is planning to add about another 17,000 square feet of retail food and beverage space by 2015 on its two domestic wings called Piers A & B. In total, that would give the airport more than 522,000 square feet of retail space.

The announcement enraged Richmond City council, which says the commercial operation will directly impact local businesses and also conflicts with the city’s official development plan.

The effort to lure shoppers and make the airport more friendly for passengers comes despite a lingering preference among some travellers to use Bellingham and Seattle airports because of cheaper airfares.

In March, a Senate committee report on airports — The Future of Canadian Air Travel: Toll Booth or Spark Plug — said that Canadian airports are losing 4.5 million Canadian passengers annually as they drive across the border to take advantage of cheaper flights. About 950,000 Canadian passengers use Bellingham and Seattle airports instead of YVR each year, according to the report, prepared by the Canadian Airports Council. That means that 20 per cent of U.S.-bound passengers who would normally use YVR were instead choosing to drive to Bellingham or Seattle. Of YVR’s 17 million passengers, five million are destined for U.S. locations. jefflee@vancouversun.comTwitter.com/suncivicleeBlog: www.vancouversun.com/jefflee

Comments

We encourage all readers to share their views on our articles and blog posts. We are committed to maintaining a lively but civil forum for discussion, so we ask you to avoid personal attacks, and please keep your comments relevant and respectful. If you encounter a comment that is abusive, click the "X" in the upper right corner of the comment box to report spam or abuse. We are using Facebook commenting. Visit our FAQ page for more information.

Almost Done!

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.

Postmedia wants to improve your reading experience as well as share the best deals and promotions from our advertisers with you. The information below will be used to optimize the content and make ads across the network more relevant to you. You can always change the information you share with us by editing your profile.

By clicking "Create Account", I hearby grant permission to Postmedia to use my account information to create my account.

I also accept and agree to be bound by Postmedia's Terms and Conditions with respect to my use of the Site and I have read and understand Postmedia's Privacy Statement. I consent to the collection, use, maintenance, and disclosure of my information in accordance with the Postmedia's Privacy Policy.